Stocks in London closed lower on Wednesday, giving up earlier gains, though defence shares rose after NATO members pledged to boost military spending.
The FTSE 100 index closed down 40.24 points, 0.5%, at 8,718.75. It had earlier traded as high as 8,792.43.
The FTSE 250 ended 28.16 points lower, 0.1%, at 21,298.04, and the AIM All-Share fell 2.09 points, 0.3%, at 760.45.
The Cboe UK 100 closed down 0.5% at 869.26, the Cboe UK 250 ended 0.4% lower at 18,805.03, and the Cboe Small Companies declined 0.3% at 17,219.88.
In European equities on Wednesday, the CAC 40 in Paris closed down 0.8%, and the DAX 40 in Frankfurt ended 0.6% lower.
In London, Babcock International leapt 11% after it raised medium-term guidance, increased the dividend and launched its first-ever share buyback as it said it stands to benefit from increased spending on defence.
Babcock said it expects to achieve its previous medium-term target of an underlying operating margin of 8% in financial 2026, ‘at least one year earlier than we anticipated’.
Underlying operating margin in the financial year to March 31 improved to 7.5% from 5.4%.
Babcock’s new medium-term underlying operating margin aim is ‘at least 9%’, up from ‘at least’ 8% before.
Babcock reported pretax profit of £329.1 million in the financial year to March 31, surging 52% from £216.7 million a year prior.
Revenue was 11% higher at £4.83 billion from £4.39 billion. Growth, it said, was driven by Nuclear and Marine.
‘This is a new era for defence,’ declared Chief Executive Officer David Lockwood.
Lockwood said the strong financial performance in financial 2025, with ‘operational momentum across the business’, has enabled the firm to ‘upgrade our medium-term guidance, increase our dividend and launch a £200 million share buyback programme for the first time in the company’s history.’
Defence and aerospace stocks Rolls-Royce and BAE Systems rose 0.8% and 1.0% respectively as NATO agreed to ramp up defence spending.
The deal hatched by NATO sees countries promise to dedicate 3.5% of GDP to core military spending by 2035, and a further 1.5% to broader security-related areas such as infrastructure.
On Wall Street, markets were mixed at the time of the London close on Tuesday.
The Dow Jones Industrial Average was down 0.2%, the S&P 500 was flat, and the Nasdaq Composite was up 0.3%.
The yield on the US 10-year Treasury was quoted at 4.32%, stretched from 4.30%. The yield on the US 30-year Treasury was quoted at 4.86%, widened from 4.85%.
The pound was little changed at $1.3622 at the time of the London equities close on Wednesday, compared to $1.3621 on Tuesday. The euro stood higher at $1.1626 against $1.1621. Against the yen, the dollar was trading at JP¥145.60, up compared to JP¥144.84.
Back in London, WPP led the blue-chip fallers, down 3.3%, as Barclays downgraded to ’underweight’ and Goldman Sachs lowered its share price target.
On the FTSE 250, Moonpig fell 4.1% ahead of full-year results on Thursday, while Tritax Big Box REIT fell 2.9% after striking a cash and shares deal to acquire Warehouse REIT, which rose 5.6%.
Tritax Big Box will pay 47.2p in cash, plus 0.4236 of one of its own shares, for each share in Warehouse REIT, in a deal which values its fellow industrial warehouse investor at £485.2 million.
THG leapt 13% after disclosing a ‘much improved’ second quarter in its core Beauty and Nutrition arms, as it returned to revenue growth.
The Manchester-based retail firm, behind brands such as Lookfantastic and Myprotein, said the group returned to constant currency revenue growth in the quarter ‘underpinned by a strong June exit rate supporting unchanged full-year 2025 guidance.’
Andrew Wade, analyst at Jefferies, said it was a ‘solid’ update and ‘with momentum building and forecasts stabilised’, adding he sees ‘clear upside’ to the share price.
Wade said financial 2026 ‘looks set to be the year in which THG demonstrates its underlying potential - we anticipate both Beauty and Nutrition will be in robust growth, and this should drop through to a year of strong cash generation - the template for future years.’
Elsewhere, Ultimate Products shares slumped 30% as it warned that it expects full-year adjusted earnings before interest, tax, depreciation and amortisation below consensus, with sales weighted toward lower margin product categories.
The Manchester, England-based owner of homeware brands including Salter and Beldray said it expects an adjusted Ebitda for the year to the end of July of £12.5 million, against a consensus of £14.3 million.
It would also be below the £18.0 million it achieved in financial 2024.
Brent oil steadied on Wednesday after heavy falls the day before, trading at $68.18 a barrel, up from $68.08 on Tuesday. Gold was quoted higher at $3,323.77 an ounce against $3,314.07.
The biggest risers on the FTSE 100 were Babcock International, up 111.00 pence at 1,144.00p, JD Sports, up 1.74p at 78.42p, Fresnillo, up 29.00p at 1,439.00p, Scottish Mortgage Investment Trust, up 17.50p at 1,022.50p, and Endeavour Mining, up 34.00p at 2,246.00p.
The biggest fallers on the FTSE 100 were WPP, down 17.00p at 505.00p, easyjet, down 13.80p at 525.20p, Anglo American, down 49.50p at 2,005.50p, Berkeley Group, down 86.00p at 3,816.00p and Croda, down 67.00p at 2,993.00p.
Thursday’s global economic calendar has US weekly initial jobless claims data, quarterly GDP and personal consumption expenditures figures and durable goods orders figures.
Thursday’s local corporate calendar has full-year results from electricals retailer Currys, and trading statements from outsourcer Serco and automotive distributor Inchcape.
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